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ELLIOTT WAVE ANALYSIS - Latest Market Commentary

Stock Indices

The S&P’s continued gains during the first part of this week have now exceeded resistance levels of 1960.00+/- that defined only a three price-swing counter-trend recovery from the mid-October low of 1820.66. The additional advance to just above 1990.00+/- changes the dynamics of price movement for the next few weeks as a five wave impulse pattern is now visible. This translates into upside continuity once a temporary corrective decline rebalances the current advance. In Elliott Wave terms, the original counter-trend ###decline that began from the September high as intermediate wave (4) has transformed into an ongoing expanding flat pattern, a-b-c. The mid-Oct. low at 1820.66 ending minor wave a. with the current advance unfolding into a 5-3-5 zig zag as minor wave b. with upside targets to 2100.00+/-. This same pattern formation, a 5-3-5 zig zag upswing from the mid-Oct. lows is replicated for the Dow Jones towards ultimate targets between 17723.00-958.00, the Russell 2000 to 1258.43+/- and the Nasdaq 100 to 4291.08+/-. In Europe, the same upside recovery from the mid-Oct. lows has more commonly unfolded into a three wave zig zag pattern that is normally a signal of an imminent resumption of its larger decline unfolding from the Sep.’14 highs. But as U.S. indices are now pointing higher for the next several weeks, our latest European index updates for the EuroStoxx 50 and Xetra Dax depict the current zig zag patterns as ending only the first sequence within an ongoing double zig zag advance, thus synchronising with global markets. These are expected to peak below the current September highs. In this latest report we include two key ‘anchor’ charts that depict a bearish outlook resuming once the current shorter-term upswings have reached their targets. The first describes the MSCI Emerging Market index unfolding into a clearly defined zig zag decline from the April ’11 high with downside targets at -24% per cent below current levels – the second depicts an expanding flat pattern unfolding for Singapore’s Straits Times index from the Nov.’10 high with downside targets -22% per cent below current levels. So whilst shorter-term momentum can be confirmed to the upside, there is a certain limit to these gains prior to a sustained decline resuming across the board. 29th October 2014

Financial Updates Currencies

Currencies (FX)

The FOMC meeting triggered late-session buying of US$ Dollars as it modified its language over U.S. employment stating that ‘a range of labour market indicators suggests that underutilisation of labour resources is gradually diminishing’. Its quantitative bond-purchase programme ends, but it also reiterated its commitment to low interest rates for a ‘considerable time’. The US$ dollar index broke above key overhead resistance at 86.01 to confirm its corrective decline that began earlier this month from 86.74 had ended. The next sequence ###in its overall five wave impulse advance that began from the May ’14 low of 78.90 is targeting upside levels towards 87.53+/-. Meanwhile, the Euro/US$ has equally confirmed its counter-trend upswing from this month’s low of 1.2500 ended at 1.2888 with a more immediate continuation lower now assured. Next downside targets are towards 1.2396+/- although ultimate downside targets for the completion of its entire five wave impulse pattern that began from the May ’14 high of 1.3993+/- remains unchanged, towards 1.2184+/-. A revised wave count is updated for the US$/Yen in this latest report. Its positive correlation with the Nikkei stock index suggests intermediate wave (5)’s advance that began from the July ’14 low of 101.06 remains incomplete with targets towards 112.38. The Aussie/US$ briefly traded outside of its recent trading range having begun a counter-trend upswing from the Oct.’14 low of 0.8643 but this has now completed at Wednesday’s high of 0.8913. Next downside targets are towards 0.8470+/- as the continuing five wave impulse decline unfolds from the July ’14 high of 0.9506. 29th October 2014

Financial Updates Bonds

Bonds (Interest Rates)

The latest comments from the Federal Reserve following its latest FOMC meeting were seen as ‘upbeat’ from the market as labour market conditions were seen an improving whilst the likelihood of inflation running persistently below 2% percent had diminished. This initially send stock markets lower, later recovering, the US$ dollar higher and US10yr yields edging modestly higher to 2.36%. The overall upward progress from the mid-Oct.’14 low of 1.912% is keeping in step with the U.S. stock market,### specifically the S&P 500. The only difference is the Elliott Wave patterns – whilst the S&P is unfolding higher into a five wave impulse sequence, the US10yr yield is unfolding into an overlapping sequence that is consistent with counter-trend patterns. This may ultimately prove to be a significant factor in the assessment of its progressive, larger trend. Since declines unfolded into the October low, the Elliott Wave count has entered a position of dual feasibility of two ongoing scenarios. It will take a break outside the existing range between 2.655% and 1.912% to determine an uptrend or downtrend in progress for the next several months. Meanwhile, in Europe, the DE10yr yield continues higher from its mid-Oct.’14 low of 0.666% but is engaged in a modest counter-trend rally as a 4th wave within a larger five wave decline that has been in force since forming a high in Sep.’13 at 2.051%. Upside targets remain unchanged towards max. 0.957% although we expect a shorter-term retracement beforehand, towards 0.760%. 29th October 2014

Commodities

A stronger US$ dollar due to latest statements from the Federal Reserve following its latest FOMC meeting contributed to late-session declines for Gold with prices trading down to 1208.45. The FED stated that an improving labour market and a diminishing threat of inflation running below its target level of 2% gave an upbeat assessment to the U.S. economy, a bearish factor for precious metals as it also confirmed the ending of its quantitative easing, bond-purchase programme. Gold is now entering an important inflexion point towards ###the 1202.50+/- level that will ultimately determine its direction for the next couple of months. Should gold smash through this support, it would almost certainly confirm downside continuation for a more direct attempt to our medium-term targets towards 1096.00+/-. Alternatively, price-rejection and a subsequent upswing back above 1222.40 would isolate a recent counter-trend zig zag pattern in the decline from the Oct. 21st high of 1255.61 and signal a continued advance to 1302.16-07.65+/- (see charts in report dt. Oct.18th). Both scenarios currently carry equal weight with one bearish aspect as the strengthening US$ dollar whilst the more bullish Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) shows large traders and speculators increasing their long positons in a fourth consecutive week. Silver is similarly trading at an ‘inflexion point’ – noticeably, whilst gold has traded lower, silver is holding above its October low of 16.64. When precious metals have been ready to decline in the past, silver has led – this time, it is holding its ground, perhaps a positive show. If it can break overhead resistance at 17.72-82, then it would delay a final downside attempt to 16.15, max. 15.50+/- with an interim upswing to 19.23+/-. Crude Oil hit the headlines once again as supplies and stockpiles increased whilst OPEC countries continue their current production quotas. Nothing is seemingly changing until the next OPEC meeting scheduled for November. The recent price declines are seen as the concluding sequence of a multi-year Elliott Wave expanding-flat pattern that began from the May ’11 highs. Downside targets are still some way off, towards a reattempt of the Oct.’11 low at 74.95 or max. 67.77 but a short-term rally is already underway with upside targets to 86.00+/-. 29th October 2014

LATEST ARTICLES

THE ‘INFLATION-POP’ - PRECIOUS METALS SET TO SURGE INTO RECORD HIGHS

Bloomberg hosted a Precious Metals Forum on 23rd May and WaveTrack International was invited to present our latest Elliott Wave price-forecasts. The event was sponsored by the CME Group and Johnson Matthey.

OUTLOOK & FORECASTS FOR 2013

Highlights:

  • The 2013 outlook for global stock indices and commodities remains very bullish and is entering the last stage of the ‘inflation-pop’ phase that originally began from the post-financial crisis lows of 2008/09
  • This is expected to ignite another period of asset buying that increases risk-on multiples by a minimum 45% per cent and in some cases as much as +300% per cent, sending some global stock indices and commodities into record highs
  • Shorter-term, there is a danger of a downward adjustment of -5-8% per cent, but then sharp price advances to resume
  • Commodity related stock indices and equities are expected to outperform as a sector during the next 12-16 months
  • Banking stocks to participate, but most will not exceed their pre-financial crisis highs

As always, this year’s Outlook & Forecasts for the next twelve months are created applying the Elliott Wave Principle for the assessment of pattern and price amplitude, also Cycle Analysis for the timing of the larger trend reversals. Not always do they jive, but they seldom contradict and more often, provide valuable insights into one or two variations of a similar theme within a seemingly unlimited amount of possibilities.

Even though this report outlines the price expectancy of all asset classes for 2012 it will also illustrate how this coming year fits together into the larger picture. The reasoning behind this is to move away from the 'black-box' stereotype and show you why the results relate to their specific outcome. Overall, this report deals with two different time-periods – long-term and inter-mediate term. Long-term refers to the uptrends from the Great Depression of 1932 onwards and inter-mediate term for the coming year and into 2013.

HOW TO INTERPRET EACH ELLIOTT WAVE CHART

What do you see when looking at an Elliott Wave chart? Just lots of numbers & letters overlaying the price data? – or do you see definable patterns that are immediately familiar? And how do you interpret the results of the analysis and put it into an effective trading plan? Read on and test your own knowledge of these subjects and much more...

A COMMODITY SUPER-CYCLE?

Recent reports of a Commodity Super-Cycle grabbed my attention for two reasons – first, this is diametrically different to the outlook I foresee developing during the next decade, and second, this terminology has surfaced at a time when various commodities have already undergone large percentage gains measured from the Feb.'09 lows

THE 'DEFLATIONARY SCENARIO'

The primary theme of this presentation focuses on a 'Deflationary' outlook, forecast as the dominant aspect continuing during the next decade. This is derived from analysing the Elliott Wave pattern structure of the CRB (Cash) Index during its expansionary period of the last 76 years.

THE 'FLASH CRASH'

The Update Alert! messaging service of EW-Forecast Plus responded to the sharp collapse and the following recovery of US stock indices during the volatile trading session on the 6th May.

OUTLOOK FORECASTS FOR 2011

This analysis centres around the S&P 500 that is used as a proxy for other global indices. The great bull market beginning from the 1932 low ends 68 years later in 2000 - other global indices peaked later in 2007 (75yrs) – some still continuing to progress.

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"I just wanted to congratulate you on the EW-Compass reports launch. I'd say all the work you've all put into this project is well worth it… never cease to be amazed by the harmony that you find between the fib relations you highlight and the Elliott count you propose. You are a true descendant of RNE, and I'm quite sure he'd have really loved to see your work… Another aspect that sets you apart is your deep knowledge of the how and why of pattern relationships between higher & lower degrees of the same price action. So much to learn there". - T.S.

ELLIOTT WAVE PATTERN

INTRODUCTION TO THE WAVE PRINCIPLE

The Wave Principle, often referred to as Elliott Wave is a unique methodology that applies Natures Laws, those encompassing the Natural Sciences and Universal Geometric Philosophies to the financial markets. It allows us to view price fluctuations as an organised process that can be non-linearly extrapolated to gain a glimpse into the future direction of trends, counter-trends and amplitudes on any market or contract traded around the world.

Expanding Diagonal Patterns - Do they actually exist? - Elliott's inclusion of the Contracting Diagonal

In R.N.Elliott's original treatise of "The Wave Principle (1938)", he introduces us to diagonal patterns for the first time on page 21. Under the heading, Triangles, Elliott describes the difference between horizontal triangles that represent hesitation within an ongoing, progressive trend and diagonal triangles that form the concluding 5th wave of a larger five wave sequence.

NEWS & EVENTS

Tradersworld Online Expo #12 – Starts 12th November 2012

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 12th Trader Expo held online for 7 weeks starting on 12th November 2012 and ending in the new year on 6th January 2013. Peter’s presentation is entitled “Elliott Wave Price Forecasts & Cycle Projections – Three Phases of the 18 Year Bear Market ~ ‘Shock–Pop–Drop’” for more information visit http://tradersworldonlineexpo.com/

Announcement: 123rd Battery Council & Trade Fair Convention in Miami, 1-4 May 2011

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 123rd Trade Fair Convention of the Battery Council in Miami, 1-4 May 2011. Peter’s presentation is entitled "The Historical Price Trend of Lead and Applying the Elliott Wave Principle to plot its course into the Future".

News Alerts

ELLIOTT WAVE PRICE-FORECAST UPDATES